The rules around getting a mortgage could change if new proposals from the Financial Conduct Authority are approved1.
The Financial Conduct Authority, also known as the FCA, regulates the UK mortgage market and sets rules that lenders must follow. Its latest Mortgage Rule Review is looking at whether parts of the current system could be made more flexible, particularly for people who may be able to afford a mortgage but find it difficult to meet traditional lending criteria1.
The proposals are intended to support groups who may currently be underserved by the mortgage market, including first-time buyers, self-employed people, borrowers with variable income, older homeowners and those with historic credit issues1.
Nothing has changed yet. The consultation is open until 28 July 2026, and the FCA will consider responses before deciding whether to introduce any new rules1.
Why are mortgage rules being reviewed?
Mortgage rules are there to protect borrowers and make sure lending is affordable. Lenders need to check that customers can manage their repayments, both now and in the future.
However, the way people earn, borrow and manage their finances has changed. Many people no longer have one straightforward monthly salary. Some are self-employed, some work on contracts, some have income that changes throughout the year, and some want to borrow later in life.
The FCA is considering whether lenders should have more flexibility to assess people as individuals, rather than relying too heavily on standard rules that may not reflect their full financial position.
This is not about removing affordability checks. It is about asking whether responsible lending can be made more practical for modern borrowers.
Who could benefit from the proposals?
The proposed changes could help people whose circumstances are less straightforward.
That may include first-time buyers who can afford monthly payments but struggle to pass certain affordability checks. It may include self-employed workers whose income varies from year to year. It could also help older borrowers looking at later-life mortgage options, or people whose credit history does not fully reflect their current financial situation.
The impact will depend on the final rules and how lenders choose to apply them. Even if the proposals are approved, not every borrower will automatically find it easier to get a mortgage.
More support for people with changing income
One of the areas under review is how lenders assess income that is not fixed.
This could be relevant if you are self-employed, a contractor, a freelancer, a seasonal worker, or someone with more than one source of income. It may also apply if part of your income is paid in a foreign currency.
At the moment, some borrowers can find it harder to get a mortgage because their income does not fit neatly into a standard employed salary. A lender may want several years of evidence, or may take a cautious view of income that changes from month to month.
The proposed changes could give lenders more room to look at the reality of your earnings and spending patterns. That could lead to fairer assessments for people who can afford a mortgage, but whose income does not follow a simple monthly pattern1.
You would still need to provide evidence of income and show that the mortgage is affordable.
A more balanced view of past credit issues
The proposals could also help some people who have had credit problems in the past.
A missed payment, default or other credit issue can make a mortgage application more difficult, even if the problem happened some time ago and your finances have improved since then.
The FCA is considering whether lenders should have clearer scope to distinguish between historic credit issues and current financial difficulty1.
This could mean that lenders place more weight on your current circumstances, such as your income, outgoings, savings, recent credit behaviour and overall ability to manage the mortgage.
Past credit issues would still matter. Lenders would still need to understand what happened and assess the risk. But the approach could become more rounded, particularly where the issue was historic or isolated.
More options for older homeowners
The review also looks at borrowing in later life, including retirement interest-only mortgages.
A retirement interest-only mortgage allows you to pay the interest each month, with the loan usually repaid when the property is sold, when you move into long-term care, or when you die.
For some older homeowners, this type of mortgage may help them manage borrowing, stay in their home, or access money tied up in the property.
The FCA’s proposals could give lenders more confidence to offer suitable later-life mortgage options. However, borrowing in later life needs careful thought. It can impact means tested benefits, future choices, inheritance plans and the value of your estate.
You should always seek regulated advice before considering later-life borrowing.
Interest-only mortgages may become more flexible
The FCA is also considering changes to interest-only and part interest-only mortgages.
With an interest-only mortgage, your monthly payments cover the interest, but not the original loan amount. This means you still need a plan to repay the capital at the end of the mortgage term1.
The proposed changes could allow lenders to take a more flexible approach when considering interest-only borrowing and repayment strategies.
This could help some borrowers, especially where a repayment mortgage is not the only suitable option. However, interest-only borrowing carries important risks. If your repayment plan does not work, you may need to sell your property or find another way to repay the loan.
A mortgage adviser can help you understand whether this type of mortgage is appropriate for your circumstances.
What could this mean for first-time buyers?
For some first-time buyers, the proposals could make the mortgage process more accessible.
This may be helpful if you have a good income but struggle with affordability calculations, have variable earnings, or have a historic credit issue that does not reflect your current financial position.
If lenders are given more flexibility, they may be able to look at the wider picture rather than deciding based only on standard criteria.
That said, affordability will still be central. You will need to show that you can manage your mortgage payments and wider household costs. Lenders will also want to consider what could happen if interest rates rise or your circumstances change.
Speaking to a mortgage adviser early can help you understand how much you may be able to borrow and what steps you can take to improve your position.
What could this mean if you are self-employed?
Self-employed borrowers often face a more detailed mortgage process because their income can be harder to assess.
You may have profits that change from year to year, income taken as dividends, money retained in the business, or contracts that do not look like a standard payslip.
The proposed rule changes could encourage a more practical approach to assessing self-employed income. Instead of focusing only on rigid requirements, lenders may have more flexibility to consider the strength and sustainability of your overall financial position.
This could lead to more choice for self-employed borrowers over time.
Preparation will still be important. Keep your accounts, tax calculations, bank statements and income evidence organised, and speak to an adviser before applying.
What could this mean if you are moving home?
If you are planning to move, the proposals could affect both your own mortgage options and the wider market.
A more flexible lending environment could help some buyers access mortgages, which may increase demand. If you are selling, that could be positive. If you are buying, it may mean more competition for suitable homes.
For your own application, lenders may be able to take a more tailored view of your circumstances, especially if your income, age, credit profile or borrowing needs have changed since you last applied for a mortgage.
Before making plans, it is worth checking what you could borrow and whether your current circumstances are likely to meet lender criteria.
Will mortgages become easier to get?
For some borrowers, they might.
The proposals are designed to help creditworthy people access suitable mortgages where current rules may be creating unnecessary barriers. However, they will not mean that everyone can borrow more easily.
Lenders will still need to check affordability. They will still look at income, spending, credit commitments, deposit, property value and the overall risk of the mortgage.
The likely direction is more flexibility, not weaker standards.
What happens next?
The FCA consultation runs until 28 July 2026. After that, the FCA will review the feedback it receives and decide whether to move forward with changes.
If new rules are introduced, lenders will then need to decide how to reflect them in their own criteria and application processes. This means the practical impact may take time to appear and could vary between lenders.
For now, the changes remain proposals.
If you are thinking about buying, remortgaging, moving home, borrowing in later life, or applying with more complex circumstances, speak to a mortgage adviser. They can explain the options available.
Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
There may be a fee for mortgage advice. The precise amount of the fee will depend on your circumstances.
Think carefully before securing other debts against your home/property.
All the information in this article is correct as of the publish date 25th June 2026. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.
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References:
- FCA. (2026). CP26/18: Mortgage rule review – supporting first-time buyers and underserved consumers. [online] Available at: https://www.fca.org.uk/publications/consultation-papers/cp26-18-mortgage-rule-review-responsible-lending [Accessed 23 June 2026].
